|
|
its broadband pipes
May choose not to carry competitors' services
By Marty Beard
In a controversial ruling, the Federal Communications Commission yesterday gave the nation's cable broadband providers the right to refuse to carry competitors’ content and services.
The FCC ruling, in response to a directive from Congress, exempts cable companies from the so-called must-carry provisions that apply to telephone companies, reclassifying them as information services.
The ruling will allow cable companies to choose which competitors they will allow to stream content through their high-speed pipes and what services those competitors can offer through those pipes.
ISPs who are refused carriage will be forced to continue offering their services over much slower dial-up telephone lines, putting them at an enormous disadvantage against their broadband competitors.
A similar effort is underway to exempt telephone companies from having to carry competitors over their DSL broadband lines.
FCC commissioners voting in favor of yesterday's ruling contend the exemption is necessary to encourage cable companies to undertake the expense of building up their broadband networks, arguing that those companies are reluctant to do so if competitors are able to gain equal access.
Another argument, looming in the background, is that stimulating broadband development would aid the nation's ailing economy.
Critics see the ruling as opening the way for yet further consolidation within the industry at the expense of smaller internet service and content providers, as well as consumers, who they say will end up paying higher prices.
"Cable will now be able to become an even more powerful media gatekeeper, controlling much of what will be digitally distributed into U.S. homes," says Jeff Chester, executive director of the Center for Digital Democracy.
When or if the ruling will take effect, however, is uncertain at best. It will most surely be challenged in court by state regulators over a provision that reduces the authority of local communities to regulate cable companies.
It is also less than certain that even given such power to refuse to carry competitors, many cable companies will still choose to do so in practice.
In the opinion of some industry experts, cable companies have more to gain by opening their pipes to all, in terms of revenue the increased traffic would bring. They point to a number of recent deals between cable companies and competing ISPs as evidence.
The country’s third-largest internet service provider, EarthLink, already has deals with major cable networks, and it recently signed a deal with AT&T Broadband.
Still, ISPs are not pleased by yesterday's ruling.
"Today's FCC decision is bad law and bad policy," says Dave Baker, vice president for law and public policy at EarthLink.
"The FCC fails to make the fundamental distinction between how you treat regulated networks like cable systems and unregulated information services like broadband internet access that travel over those networks. Both statute and longstanding FCC precedent draw these distinctions, which the FCC chooses to ignore in today's decision."
But Ben Macklin, senior analyst with eMarketer, while agreeing that the decision will make life harder for the smaller ISPs, wonders how much harder.
"This is certainly going to be tough for smaller ISPs, but it always has been," Macklin says. "The situation has not changed radically for smaller ISPs now.
"Should the government step in and impose regulations to help one operator over another just because they are smaller? Maybe. It depends on which side of the political spectrum you belong."
Others wonder as well how much consumers will suffer.
"Do you really need another choice?" asks Paul Benjou, director of client services at online ad network Mediaplex. "Is one service provider really better than another?
And while broadband access is widely expected to grow apace, there are many who doubt yesterday's decision will ultimately serve to speed that growth, since much of the high-speed infrastructure is already in place.
According to the FCC, 78 percent of U.S. zip codes have access to at least one cable internet access provider, and 58 percent have a choice of more than one provider.
In all, according to eMarketer, 11 percent of U.S. households have broadband access.
Yet 51 percent of time spent online comes from people using broadband connections, according to Nielsen//NetRatings.
And while broadband access is widely expected to grow apace, there are many who doubt yesterday's decision will ultimately serve to speed that growth.
"The whole broadband debate has become extremely politicized, with many players having their own agenda," says Macklin.
"People are looking at broadband to not only pull the U.S. out of recession, but many have also said that the very future security of the U.S. depends on widespread broadband adoption. This is clearly an overestimation."
|
Online
Households in the U.S. |
|||||
| Technology |
2000 |
2001 |
2002 |
2003 |
2004 |
| Dial-up |
41.8 |
45.2 |
46.1 |
44.7 |
42.1 |
| WebTV |
1.0 |
0.8 |
0.6 |
0.5 |
0.5 |
| iTV (broadband) |
N/A |
0.5 |
1.5 |
1.5 |
3.0 |
| Cable |
3.7 |
6.8 |
9.9 |
13.3 |
16.6 |
| DSL |
2.4 |
4.1 |
6.2 |
8.5 |
11.5 |
| Other broadband |
0.1 |
0.5 |
1.0 |
2.3 |
3.6 |
|
Source: eMarketer |
|||||
|
Leading Cable Internet Access Providers |
|
| Provider |
No. households subscribing |
| AT&T Broadband | 1.5 million |
| Comcast | 950,000 |
| Cox Communications | At least 600,000 |
| AOL Time Warner (Road Runner) | 1 million |
| EarthLink | N/A |
| Total at-home broadband unique audience | 21.9 million |
|
Sources: Hoover’s, Comcast,
Nielsen//NetRatings |
|
March 15, 2002 © 2002 Media Life
-Marty Beard is a staff writer for Media Life.
Printer-Friendly
Version | Send
to a Friend
Cover Page | Contact
Us
